Building your Ideal Investor Profile

Ideal Investor Profile
As a private equity marketing professional building your Ideal Investor Profile can help you focus and prioritize your marketing and capital raising efforts. By having a clear understanding of what your ideal investor looks like, you will be able to improve your targeting and communicate more effectively with your current and potential LPs.

Firmographics

Firmographics are sets of characteristics to segment organizations. Firmographics used to define your ideal investor profile include:

• Geography

Some LPs prefer and/or are mandated to invest in GPs within certain geographic areas (e.g. a local state pension). Geography can also simply impact the logistics of fundraising where it may be easier to raise from local investors.

• Investor Type

Defining which investor types you want to raise from is important because different investor types have different investment objectives, decision making processes, regulatory requirements, etc.

Common investor types investing in private equity include: endowments & foundations, family offices, insurance companies, pension plans (corporate and public), and sovereign wealth funds.

• Asset Allocation

Knowing if the LP is under- or over-allocated to your (sub) asset class is important to understand as it determines if they have capital available for your fund.

• Bitesize range

Bitesize refers to a range of money that an investor looks to commit to each vehicle in which it invests. Understanding bitesize ranges can help private equity fund managers to optimize their fundraising efforts by targeting investors who are most likely to invest the desired amount in their fund.

Secondly, If a fund manager knows that their target investors’ bitesize ranges are relatively small, they may choose to e.g. reduce their management fees in order to make their fund more appealing to those investors.

• Strategy/Sector Exposure

If your fund focuses on a specific sector (e.g. healthcare or technology) it can be helpful to identify investors whose investment preferences and goals align with your investment strategy and sector focus, and explore whether they already have exposure to your focus area(s).

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